People who lived and worked as far north as Canal Street on 9/11 will be eligible to receive compensation for illnesses brought on by the attacks, under expanded guidelines announced by the federal government yesterday. Sheila Birnbaum, head of the $2.8 billion Sept. 11th Victim Compensation Fund, enlarged the geographic zone 10 blocks, from Reade Street to Canal Street — enabling potentially thousands of additional people to get assistance.

The fund will open Oct. 3 to review claims that include lung and other respiratory-related diseases — but will exclude all cancers.

Those who suffer only from mental or emotional injuries, such as post-traumatic stress, are barred from victims’ compensation — although they can get treatment from the World Trade Center Environmental Health program.

Birnbaum said compelling public comments, as well as scientific and medical evidence, persuaded her to expand the zone.

Evidence suggests “that prolonged exposure to dust between Reade and Canal streets created a demonstrable risk of physical harm,” she said.

She also noted there are already a substantial number of patients who live between Reade and Canal receiving treatment in the federally funded World Trade Center Environmental Health Program.

“My goal is for the Victim Compensation Fund to be fair, transparent, and easy to navigate for those who have been affected the most by the devastating events of Sept. 11,” Birnbaum said.

But Birnbaum — siding with federal medical experts — said cancer will not be covered because there’s insufficient evidence proving it’s caused by toxic dust.

New York lawmakers and 9/11 advocates praised Birnbaum’s decision to expand the map.

The rules help implement the James Zadroga 9/11 Health and Compensation Act to aid responders, volunteers and downtown residents sickened from the toxic stew unleashed by the terrorists’ toppling of the Twin Towers.

“We are pleased that . . . Ms. Birnbaum has expanded eligibility for the VCF to those who live below Canal Street, an area that was significantly impacted by the attacks,” Reps. Carolyn Maloney and Jerrold Nadler, both Manhattan Democrats, and Peter King (R-Nassau), said in a joint statement.

Birnbaum also said she would impose a hard 10 percent cap on lawyers’ fees, barring special circumstances.